June 21, 2023

Inside Indonesia's coal conundrum

topic:	Divestment
located:	Indonesia
editor:	Leo Galuh

Indonesia stands as the world's fourth-most populous country, boasting the seventh-largest economy, ranking 12th in terms of energy consumption and holding the distinction of being the largest exporter of coal. The nation heavily relies on coal as a primary source of energy for both domestic needs and international trade.

In April 2023, Indonesian President Joko Widodo stated his government's plan to retire at least 118 coal-fired power plants with the financial assistance of foreign nations was hindered by COVID.

Given the circumstances, the Indonesian government should explore novel and cost-effective ways to slash global carbon dioxide (CO2) emissions in order to maintain its commitment to the Paris Agreement's global temperature goals. 

President Widodo has identified two primary challenges that Indonesia must overcome in its mission to retire its current tally of 253 coal plants: financial constraints and a deficiency in technological capabilities aimed at diminishing coal dependence within its energy portfolio. 

Coal power plants have exerted a significant influence on Indonesia's energy sector, accounting for 66 percent of power generation in 2021. Alarming statistics reveal that coal plants have been responsible for approximately 40 percent of the sector's emissions, and an astonishing 90 percent of emissions from the power industry.

Despite these concerning figures, the recent Long-Term Electricity Procurement Plan (RUPTL) of state-owned electricity company Perusahaan Listrik Negara (PLN) still includes the addition of 13.8 GW of coal power plants over the next decade. Such a trajectory starkly contradicts the objectives outlined in the Paris Agreement.

IESR executive director, Fabby Tumiwa, emphasised the prudence of canceling coal-fired power plants, asserting that such a measure would not compromise energy security or affordability. Tumiwa further stressed that compared to alternative interventions like co-firing and early coal retirement, cancelling these plants would be the most cost-effective approach. He also highlighted that this decision would present an opportunity for PLN to increase renewable energy capacities while simultaneously reducing system and electricity costs.

A study conducted in 2022 by the Institute for Essential Services Reform (IESR) and the University of Maryland stated that 9.2 GW of coal must be phased out from the grid of Perusahaan Listrik Negara (PLN), the state-owned electricity company, by 2030. It also advocates for the complete elimination of unabated coal plants by no later than 2045.

Between 2000 and 2021, Indonesia's total energy supply increased by nearly 60 percent, according to the International Energy Agency. As demand for energy increased, coal stepped in to fill the void. Its energy sector now emits one-third more CO2 per unit of energy consumed than it did in 2000. Total energy sector emissions have more than doubled in the last two decades, outpacing energy demand. “In 2021, [Indonesia's] energy sector emissions were around 600 million tonnes of carbon dioxide (Mt CO2), making [it] the world's ninth-largest emitter,” the agency states.

Indonesia has a renewable energy potential of over 400,000 MW, with solar energy accounting for roughly half of that. Meanwhile, solar energy utilisation currently stands at around 150 MW, or 0.08 percent of its potential.

But solar power through photovoltaics (PV) and wind energy will undoubtedly play a major role in Indonesia's journey towards achieving a net-zero pathway. Moreover, individuals across the country can actively participate in emission reduction efforts by installing rooftop solar power plants in their homes. Encouraging examples of that can be found in various regions, such as Jakarta, West Java province and East Java province, where residents have already embraced this form of renewable energy.

To accelerate the transition towards renewable energy, the Indonesian Ministry of Energy and Mineral Resources has devised a plan to install 3,600 MW of rooftop solar power plants in stages until 2021. This initiative aims to inspire and engage consumers, prompting the government to issue regulations that encourage active participation and collaboration in the installation of rooftop solar power plants.

Furthermore, Indonesia has established clear targets outlined in its national energy regulation. By 2025, the country aims to achieve a minimum of 23 percent renewable energy capacity, with further growth to 30 percent by 2050.

As part of this plan, the target capacity for wind-powered plants is set at 255 MW by 2025. As of 2020, approximately 135 MW of wind-powered capacity has already been installed.

Image by Chris LeBoutillier.